Land Securities, one of the largest commercial property companies in the UK, has given a bleak outlook for the sector for foreseeable future, after the referendum caused property prices to spiral.
In an annual general meeting, the company’s chief executive Robert Noel said demand from occupiers of properties was likely to remain “subdued” following the UK’s controversial Brexit vote last month.
This comes weeks after a number of asset managers suspended trading in their commercial property funds, as thousands of investors started cashing in their investments in the wake of the referendum.
Mr Noel said: “We expect business uncertainty to persist until there is more clarity on both the timing and terms of the UK’s exit from the European Union.
“This process may take some time. Demand from occupiers is likely to be subdued until confidence returns and this may have an impact on rental values.”
The £8.7bn group saw its share price drop by 16 per cent the morning after the referendum, but has its shares have recovered slightly since then.
Mr Noel said the company proposed increasing its total dividend for the year to 9.9 per cent, adding “strong” cash flows and large undrawn banking facilities means it is “well prepared” to purchase more assets in the future.
“Land Securities’ portfolio of quality office properties and retail destinations, together with our very low leverage, high levels of occupancy and long lease terms by historical standards, put us in an excellent position.”
Despite the warnings and the general sense of doom and gloom about commercial property, Phil Cook at Thomas Miller Investment said investors should consider increasing their holdings in the sector.
However, Laith Khalaf, senior analyst at Bristol-based Hargreaves Lansdown, argued the dramatic price movements meant it was a “dangerous” time to buy into property funds.
katherine.denham@ft.com
